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Japan keeps key interest rate low

Japan's central bank has kept its key interest rate unchanged at virtually zero to help the world's number three economy weather a strong yen and worries about a global slowdown.

The Bank of Japan's nine-member policy board voted unanimously at a two-day meeting to maintain the overnight call rate target at zero to 0.1%.

It described the economy as "picking up steadily" and said the supply problems triggered by the March 11 earthquake and tsunami were mostly resolved.

The central bank expects the economy to return to moderate recovery from the second half of this fiscal year, which ends on March 2012.

At the same time, it warned of US economic uncertainty and European debt problems. It also questioned whether emerging, high-growth economies could maintain momentum while taming high inflation at the same time.

"It is necessary to carefully monitor how Japan's economy will be affected by the uncertainty regarding the developments overseas and the ensuing fluctuations in the foreign exchange and financial markets," the Bank of Japan said in its statement.

The central bank held off from introducing new measures to ease monetary policy despite calls from government and industry to do more.

Last month, it expanded two existing funding tools by 25% to 50 trillion yen (£403 billion) as part of efforts to weaken the yen.

It vowed to keep interest rates at zero until prices stabilise and said it would continue pursuing "powerful monetary easing".


From Belfast Telegraph